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And then, suddenly, the future for the S&P 500 snapped into
clear focus:

It would appear that investors have shifted their forward-looking
focus to 2014-Q1 in setting the pace of change for U.S. stock
prices. Following the period after the fiscal cliff reaction of
15 November through 20 December 2012, they had been focused
mainly on 2013-Q2.

Now that the transition in focus from 2013-Q2 to 2014-Q1 seems
assured, we can expect the recent rapid run-up of stock prices to
taper off, as the change in the growth rate of stock prices will
converge with that expected for the S&P 500's dividends per
share in 2014-Q1. Since that pace is positive, we can expect
stock prices to continue generally rising, although at a slower
pace.

However, anything that might shift the focus of investors to the
less distant future quarters of 2013-Q3 or Q4 will send stock
prices crashing.

Other factors that might cause the acceleration rate of stock
prices to deviate from the 2014-Q1's expected trailing year
dividends per share are the Fed's quantitative easing (QE)
policies, where the Fed has recently indicated it could amp up
its purchases of U.S. Treasuries or could begin tapering them off
altogether. Beyond that, random noise events could temporarily
send stock prices off track.

From our perspective, perhaps the most surprising thing about the
rally in the stock market since 15 November 2012 is that it has
been extremely driven by underlying fundamentals. The one thing
that ended the uncertainty we had was the sudden decline in the
2014-Q1's expected dividends per share, which dropped from $9.37
per share to $9.11 per share on Monday, 13 May 2013 - coinciding
with the end of the period for establishing the shareholders of
record for the biggest two stocks in the S&P 500, Apple and
Exxon Mobil.

That change brought the level of the change for the growth rate
of expected trailing year dividends per share into easy reach for
today's stock prices. With that being the case, they are more
likely to be able to hold that level outside changes in the Fed's
QE policies, which if the Fed is targeting stock prices as it has
in the past, means that they can get away with doing less as
their is fundamental reason for stock prices to continue growing.